Women’s League accused of continuous breaches of tax exemption requirements

The Ill-gotten Party Assets Settlement Committee on Wednesday accused the National Women’s League of breaching tax exemption requirements for nonprofit organizations, calling it “a possible serial tax dodger.”

Citing National Tax Bureau documents, committee spokeswoman Shih Chin-fang (施錦芳) said the league owed the government back taxes of NT$3 million (US$99,334) for 1997, NT$516 million for 2011 and NT$40 million this year.

To be tax exempt, a nonprofit must use at least 60 percent of its revenue from the interest of its fund and other sources of income for its stated purpose, according to the Rules Governing the Income Tax-exempt Status of Educational, Cultural, Public Welfare and Charitable Organizations or Institutions (教育文化公益慈善機關或團體免納所得稅適用標準).

Shih said the league relied on the regulation for its tax-exempt status, and exactly how it had incurred back taxes is not yet clear.

The committee has found other irregularities in the league’s financial documents from 2015, when it reported NT$350 million in revenue and NT$220 million in expenditures, of which NT$30 million were pension-related expenditures.

The league’s pension expenditures in 2015 were considerably higher than in previous years, which ranged from several hundred thousand New Taiwanese dollars to several million, she said.

The inclusion of pension-related spending as part of “expenditures for its stated purpose” to meet its exemption requirement was a “questionable” accounting decision, Shih said.

The league might owe substantial back taxes for 2015, she said.

The committee also believes that the National Women’s League Foundation for the Hearing Impaired had breached exemption requirements, she said.

In 2012, the Ministry of Finance ruled that the foundation was in breach of exemption requirements and demanded that it pay back taxes, Shih said.

However, the Ministry of Education — the then-managing authority of the foundation — allowed the foundation to make up the shortfall in its purpose-driven expenditures over a four-year period, thereby allowing the foundation to remain tax-exempt, she said.

Meanwhile, Democratic Progressive Party Legislator Chen Chi-mai (陳其邁) accused the league of failing to spend an appropriate share of its expenditures on charity to comply with tax-exemption requirements.

The league also failed to pay taxes on its interest-derived income. In 2008 the interest income was NT$850 million, he said.

He added that the tax bureau found that the league failed to file its business income tax for 2011 and had later paid after filing NT$516 million in business income tax.

Between 2012 and 2015, the league’s loan interest amounted to at least NT$310 million per year, which had accumulated NT$62 million in back taxes on the interest income over the four years, and it was not completely repaid until last year, Chen said.

“The tax bureau in 2011 billed the league for NT$516 million in back taxes, which means that it knew about the league’s tax dodging for years,” he said.

The league was registered as a political organization in 1990 and its charter has no provisions for liquidating its assets if it is dissolved, which should have disqualified it for tax exemption, Chen said.

The league has refused to change its charter and resorted to paying back taxes, proving it wants to hide assets from public oversight, he said.